For the country’s two leading economic managers, the worst seems over for the battered Philippine economy. Finance Secretary Carlos Dominguez III and Bangko Sentral Governor Benjamin Diokno both agree the calibrated reopening of the economy is turning things around after earlier lockdowns that restricted the movement of the people.
The road to economic recovery, however, will be a protracted one and will depend on consumer confidence. It will also, to a great extent, hinge on successfully containing the virus infection.
The economic managers expect the Philippine economy to contract 6 percent in the whole of 2020, instead of at a rate of 5.5 percent following another lockdown in August. The economy shrank 9 percent in the first six months of the year, mainly because of the deeper 16.5-percent contraction in the second quarter.
With the economy’s performance in 2020 already a foregone conclusion, the economic managers can only look forward and hope for a solid turnaround. The government, says Dominguez, is bent on rebuilding a better economy in 2021, with the expectation the COVID-19 pandemic would dissipate by that time.
“The Duterte administration’s aim is to pursue a safe new normal while we strive for a better normal. We cannot completely lock ourselves up to avoid COVID-19 at the expense of other vital dimensions of our lives. We should take less costly but effective measures,” the finance chief adds.
Governor Diokno, meanwhile, is optimistic after the reopening of the economy. Previous lockdown measures, he notes, have resulted in flattening the curve and allowed the government to build the necessary health capacity.
Some positive data support Diokno’s rosy assessment. The calibrated easing of mobility restrictions led to improved better figures in the unemployment rate, which dropped to 10 percent in July from 17.7 percent in April, when strict lockdowns were still in place.
Manufacturing also slowed down its contraction after the economy gradually reopened, while revenue collections by the Bureau of Internal Revenue and Bureau of Customs exceeded revised targets by 8 percent in the first nine months.
The economy for sure will recover down the road after a steep decline. But the economic rebound will depend on how much lessons the Filipinos have learned from the pandemic.